What You Need to Know About LTOs

Seasonal or “limited time offer” menu options run rampant in the restaurant and retail industries. A few examples include McDonald’s Shamrock Shake, Taco Bell’s Nacho Fries, and McAlister’s Pecanberry Salad. Operators often use LTOs as a middle-of-the-funnel tool to prompt visitors into becoming buyers.

We see them everywhere, but how can restaurants take advantage of these limited-time offers and drive customer traffic?   

Why Are LTOs Effective?

Let’s take a step back. What is an LTO or limited time offer? Food and Drink Resources defines LTOs as a “special menu item or set of menu items available for a clearly defined short period.” Giving customers a deadline to make a purchase decision forces them to make a purchase decision faster. In marketing terms, LTOs create “scarcity bias” or a belief that they will not be able to purchase that item after the announced deadline. Social media and constant information processing have created a phenomenon known asthe Fear of Missing Out (FOMO).Restaurant brands often play into FOMO because it "makes customers feel like they're missing out on life-changing purchases.” As a society, we don't want to miss out on anything deemed exciting, new, or trendy.

From drinks to entrees to desserts, LTOs can work for any restaurant because they make those menu items feel more exclusive and drive traffic.

Demographically, LTOs have proven effective. According to Modern Restaurant Management, 50 percent of Millennial and Gen X customers want to be the first in their friend group to try a new LTO and post it on social. It goes back to being the "pioneer" of their friend group and suggests something new. Forty-eight percent of consumers report trying an LTO menu item every month, and in ages 18-44, over 30 percent work an LTO menu item every week.  

Restaurants use LTOs for several reasons, including:  

• Product testing  
• New food and flavor news 
• Adding it in the marketing mix  
• Rewarding customers with a good deal and something special  

LTOs are great ways to bring in new customers and reward customers with promotions and discounts.  

LTO Best Practices  

When it comes to LTOs, restaurateurs need to be strategic and ensure that they’re effective. How? With these steps:  

1. Create Urgency 

The primary appeal of limited-time offers is in the name. The offer is only for a certain amount of time. Make that clear. When crafting an LTO and laying out promotional efforts, make sure the timeline is easy to understand. State a definite date on which the LTO will end to create the urgency that will influence a faster purchase decision. 

2. Offer Exclusivity/Unique Items 

Since FOMO is prevalent, your LTO needs to stand out. Make your LTO unique or offer an exclusive deal as an incentive to purchase that item. The unique factor makes that particular item easy to remember, and the exclusive offer attached can help drive customers to your restaurant to buy it.  

3. Limit the Supply 

LTOs get their "limited" name for a reason. To create a useful promotion, have just enough supply to last through the promotional period, unless you decide to extend the timeline. You can also limit the amount of supply you use. This ties into the "exclusivity" of the LTO. If your customers know they can get that item even after the promo period has ended, it will lose its appeal. They'll be less driven to purchase the item during the promotion's run.

4. Be Knowledgeable of Seasonal Trends 

Which food trends are popular in which times of the year? In the summer, consider food items like salads containing fruits that are in season. In the fall, use soups that use ingredients associated with the colder months. For example, McAlister's offers its Autumn Squash soup during this season. Think of holidays that occur during each season as well. Is there a menu item that you can offer until a certain holiday? Restaurants tend to offer options like cranberry and turkey ingredients around Thanksgiving. Last winter, Starbucks announced the Cinnamon Shortbread Latte as an LTO. Be aware of seasonal trends to ensure LTOs continue their effectiveness.

LTOs will create a buzz about a specific product or menu item in your restaurant, drive traffic, build brand loyalty, and even promote local events. From drinks to entrees to desserts, LTOs can work for any restaurant because they make those menu items feel more exclusive and drive traffic. They're also a great way to attract people who are caught in the middle of your sales funnel, prompting them to become buyers. Try one, and you'll see how beneficial it can be for your restaurant.